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United Continental said Tuesday passenger unit revenue rose 2.1% in Q2, but unit operating costs, excluding fuel, rose more than 3% as rising labour costs weighed on the industry. The airline outperformed analysts' expectations on key financial metrics, posting adjusted earnings per share of US$2.75, versus analysts' consensus forecast of US$2.67. Excluding special charges, United posted net income of US$846m and a pretax margin of 13.2%. The solid financial results for the period ended on June 30 came despite consumer outrage over an April incident in which a paying passenger was dragged off a United flight. The company eventually settled with the passenger for an undisclosed amount and promised changes to company policy in hopes of winning back goodwill. In the Q2 report, United posted a 79% decline in the number of passengers involuntarily denied boarding in May and an 88% drop in June, following the uproar over the dragged passenger. The airline performed better than expected on revenue, pulling in US$10b, up 6.4% year over year, versus analysts' consensus of US$9.97b. United also said on Tuesday it would delay taking four Airbus A350 jets from 2018 and it would accelerate its order of 12 Boeing 737 Max aircraft into 2019 and two Boeing 787-10 aircraft within 2019.<br/>

Air India is drawing up a proposal to offer voluntary buyouts to just over a third of its 40,000 employees, two government officials said, in what would be one of the largest such offers in India's state sector, as the airline slashes costs ahead of a 2018 sale. The state-owned airline has also put fleet expansion on hold, scrapping a proposal to lease eight Boeing 787 wide-body aircraft, said one of the officials, a senior Air India employee who requested anonymity as the plans are not public. Air India's board approved that proposal in April but nothing further had been done. "Nothing has been finalised but our aim is to make the strategic sale as simple as we can," the company official said, adding that any fresh investment would also be put on hold. Air India spokesman Dhananjay Kumar said the company had not offered employees voluntary buyouts. India's flag carrier is on the block after Prime Minister Narendra Modi's cabinet last month approved plans to privatize the loss-making airline by selling part or all of the company and ending decades of state support. Founded in the 1930s and known to generations of Indians for its Maharajah mascot, Air India has a complex fleet, too many staff relative to rivals and $8.5b in debt. Since 2012, New Delhi has injected $3.6b to keep it afloat. An official in Modi's office said the prime minister, under pressure to cut spending and boost basic infrastructure such as ports and roads, was in "no mood" to provide fresh monetary assistance to any loss-making public sector company. The two government sources, who are familiar with Air India's plans, said top officials in the civil aviation ministry and at Air India had been asked to present a report on how a Voluntary Retirement Scheme could be offered to some 15,000 of Air India's 40,000 staff, including contractors. Previous attempts to offload the airline have failed mainly because of the scale and complexity of Air India's problems, as well as its influential unions.<br/>

Lufthansa stock retreated from nine-year highs as the German airline looked poised for a difficult second half with pressure on fares set to intensify amid a struggle to rein in costs. Lufthansa shares fell as much as 4.3%, the steepest intraday drop since April 27, even after the carrier raised its 2017 operating profit forecast to gradually catch up with analyst estimates. While H1 earnings almost doubled on stronger traffic, investors focused on the airline’s lingering need to confront lower-cost rivals as it said ticket prices will decline. “We remain concerned that Lufthansa is not making sufficient progress in improving competitiveness in its core businesses,” Gerald Khoo, a London-based analyst at Liberum, said in a report to clients. Lufthansa’s last two monthly traffic reports showed fare growth was “positive” as a stronger worldwide economy helped passenger numbers rise. Those gains are coming to a halt, with the second-half trend for unit revenue, a measure of pricing per seat, set to be “negative,” the company said late Monday. The carrier, which has its main bases in Frankfurt and Munich, has capitalized on added demand by leasing extra aircraft from ailing rival Air Berlin Plc and acquiring full control of Brussels Airlines, which is combining with the Eurowings low-cost arm that Lufthansa is seeking to expand. H1 adjusted earnings before interest and taxes surged to E1.04b from E529m a year earlier, prompting Lufthansa to forecast profit will rise this year instead of an earlier prediction of a decline. Unit costs, or operating spending per seat excluding fuel and currency effects, fell 1.2% in the period and will continue declining in the second half, the company said, without specifying a number.<br/>

Ethiopian Airlines plans to launch 3X-weekly Addis Ababa Bole International Airport-Kaduna (Nigeria) services Aug. 1, despite the economic challenges for the Addis Ababa-based carrier. ATW understands Ethiopian will use either a Boeing 787 or 737NG on this route. With the addition of Kaduna, Ethiopian operates a total of 23 weekly flights from Addis Ababa to Nigeria’s main cities including Abuja, Lagos, Enugu and Kano. Ethiopian Airlines Group CEO Tewolde Gebremariam said: “During the temporary closure of Abuja Airport for reconstruction four months ago, we were the first foreign carrier to land at Kaduna Airport.” Gebremariam said the Ethiopian flag carrier had expanded the Nigerian services during a difficult period. “Our biggest challenge is cash because our money is stuck in [African] countries like Angola, Nigeria or Sudan,” Gebremariam said recently, adding the carrier also has “the usual problems, including high taxes, infrastructure and [high] jet fuel costs. Fuel is about 30% more expensive in Africa compared to Europe.” Gebremariam said expanding and availing a more efficient intra-African network will remain at the core of the Star Alliance member’s operation. “In line with our long-term strategic roadmap, Vision 2025, we shall keep on playing the positive role in catalyzing the socio-economic development of our continent,” he said.<br/>

Turkish Airlines is keen to ramp up its new Istanbul-Phuket flights to a daily basis from four flights a week. But that possibility hinges on more favourable landing and take-off slots at Phuket airport. Chief executive Bilal Eksi said Tuesday that the carrier is prepared to go daily on the route next year if such changes are allowed soon. The current schedules are inconvenient for transferring passengers from Turkish's global network, especially those travelling from Europe via Istanbul. Flight TK172 leaves Istanbul at 2.30pm and arrives in Phuket at 4am, with TK173 leaving Phuket at 5.30am and landing in Istanbul at noon. "If we could land here in Phuket two hours later than the current timing, that would greatly facilitate our transfer of passengers to here," Eksi said. He said Airports of Thailand Plc, which runs Phuket and other key airports in Thailand, was receptive to Turkish's request for improved time slots that would allow the airline to ferry more tourists to the southern resort island. Flight-slot constraints at heavily congested Phuket airport forced Turkish to accept the current time slots in the first place; otherwise, the Istanbul-Phuket launch would have been impossible.<br/>